Juniper Networks is cutting its workforce by 280, or 3%, this quarter as it realigns resources in high growth opportunities.
Among those impacted are personnel who worked on the company's cancelled MobileNext enhanced packet core product line for mobile operators. Juniper killed that product in August after combining business units and determining that a virtual offering on commodity x86 hardware would meet market requirements.
"The inflection point of network functions virtualization and SDN, we believe, is going to create a paradigm shift in how evolved packet core solutions are deployed," Juniper CEO Kevin Johnson said during the company's third quarter conference call this week. "We believe that's going to become more of an x86 virtualized network function, and something like Contrail (Juniper's SDN controller) will play a role in service chaining and help enabling that. And so we took a decision to cancel that project. And so that cancellation of that project is pruning the portfolio and is part of this reduction in the headcount."
Juniper will incur a restructuring charge of $10 million associated with the workforce reduction and product line rationalization. Headcount at the end of Juniper's third quarter, which ended Sept. 30, stood at 9,714.
The news comes as Juniper had a solid third quarter in which it beat Wall Street expectations in revenue and earnings. Revenue was $1.186 billion, up 6% from last year, and earnings were $.02 per share better than investment analysts' estimates and $.11 per share better than last year's.
Routing revenue was up about 22% from 2012's third quarter while switching revenue was essentially flat, growing just 1.4%. Juniper is expected to soon announce a new data center switch, the QFX5100.
The security market continues to be challenging for Juniper, with revenue dropping 18% on an annual basis yet up from the second quarter.
The quarter was driven by sales to service providers, which rose 12%. Enterprise was down about 4%.
For the current fourth quarter, Juniper expects revenue in the $1.2 billion to $1.23 billion range and earnings to increase by $.02 to $.04 cents per share.
Johnson reported that Juniper is "in the late stages" of a search for a new CEO. In July, Johnson announced plans to retire once a successor is found.
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